Survey: Nonprofits Unprepared for For-Profit Competition for Talent

The latest edition of Nonprofit HR’s Nonprofit Employment Practices Survey finds that many nonprofits don’t have formal strategies for hiring or retaining employees—and in a strong job market, that puts them at risk of for-profit poaching.

When it comes to hiring, nonprofits are still the top dog, but the competition is heating up, according to the latest edition of the Nonprofit Employment Practices Survey [registration].

The 10th edition of the study, by Nonprofit HR, finds a significant percentage of nonprofits looking to hire in 2017. But while they continue to outpace for-profit organizations, the gap has narrowed compared to last year.

In the 2016 survey, 57 percent of nonprofit employers said they planned to hire in the coming year, compared to 36 percent of for-profit organizations. In this year’s survey, 50 percent of nonprofits said they plan to hire, compared to 40 percent of for-profits.

Notably, layoffs do not appear to be on the agenda for many organizations. Just 7 percent of respondents planned to decrease staff in 2017, the lowest level reported since at least 2011.

But the growth in for-profit hiring highlights some weak spots for the nonprofit sector, the report notes. Nearly two-thirds of nonprofits (64 percent) don’t have a formal talent-acquisition strategy, and 56 percent say they have no plans to change their talent-sourcing strategy. Meanwhile, 81 percent of respondents say they don’t have a formal talent retention program, and just 27 percent said they plan to create such a program in 2017.

“As corporate hiring improves, it will be harder for nonprofits to hold on to their top performers, but most nonprofits have not put a formal retention strategy or program in place, and a majority have no plans to create one this year,” the report states.

In a news release, Nonprofit HR CEO Lisa Brown Alexander noted that the growing number of for-profit “social good” businesses could attract the same types of employees as nonprofits.

“With social enterprises and purpose-driven businesses experiencing tremendous growth, it is only going to get more difficult for nonprofits to attract and retain the top performers they need to advance their missions,” she said. “The time for organizations to get serious about recruitment, retention, culture, and human capital is now.”